Seagate’s first quarter performance received a positive reception from the market, reflecting strong demand for its mass capacity storage products and effective execution on product transitions. Management attributed the results to increased cloud customer orders, particularly for nearline hard drives, and the successful ramp-up of advanced drive technologies. CEO Dave Mosley noted, “Our supply discipline, the visibility we gain through our build-to-order strategy, and our execution on strategic pricing actions all contribute to sustainable and profitable growth over the long-term.” The company also highlighted enhanced operating margins, driven by a richer sales mix and ongoing cost controls.
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Seagate Technology (STX) Q1 CY2025 Highlights:
- Revenue: $2.16 billion vs analyst estimates of $2.14 billion (30.5% year-on-year growth, 1.1% beat)
- Adjusted EPS: $1.90 vs analyst estimates of $1.74 (9.2% beat)
- Adjusted EBITDA: $570 million vs analyst estimates of $559.6 million (26.4% margin, 1.9% beat)
- Revenue Guidance for Q2 CY2025 is $2.4 billion at the midpoint, above analyst estimates of $2.31 billion
- Adjusted EPS guidance for Q2 CY2025 is $2.40 at the midpoint, above analyst estimates of $2.05
- Operating Margin: 20%, up from 8.6% in the same quarter last year
- Inventory Days Outstanding: 96, up from 89 in the previous quarter
- Market Capitalization: $28.24 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Seagate Technology’s Q1 Earnings Call
- Erik Woodring (Morgan Stanley) asked how Seagate managed upside in the quarter despite supply shortages. CEO Dave Mosley confirmed predictability from the build-to-order model and emphasized that operational issues had been resolved in advance.
- Asiya Merchant (Citi Group) questioned the progress and impact of HAMR drive adoption. CFO Gianluca Romano stated that HAMR volume ramped faster than expected, contributing to sequential revenue gains, and more details would follow at the Analyst Day.
- C.J. Muse (Cantor Fitzgerald) asked about increased customer urgency and the effect on pricing. Mosley described improved visibility through long-term agreements and highlighted ongoing price negotiations as product transitions occur.
- Wamsi Mohan (Bank of America) inquired about margin trends given higher nearline shipments. Romano pointed to mix improvements and contract timing, with Mosley noting that Q3 supply constraints had limited prior quarter results.
- Krish Sankar (TD Cowen) sought clarity on tariff pass-through and timing. Mosley explained multiple contingency plans, with cost pass-through considered only if supply chain and operational adjustments could not offset impacts.
Catalysts in Upcoming Quarters
Looking forward, our analysts will watch (1) the pace of HAMR drive adoption and customer qualifications, (2) execution against growing build-to-order commitments with cloud customers, and (3) how Seagate navigates tariff and supply chain policy changes. The progression of technology transitions and the company’s ability to maintain margin improvements will also be important indicators of sustained performance.
Seagate Technology currently trades at $136.14, up from $81.60 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
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